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NPA row.. Banking shares dipped upto 3% in single day

Shares of the banking pack on the BSE traded lower by as much as 3 per cent on Monday after Reserve Bank of India governor Raghuram Rajan said existing loans could be written off to allow banks to tackle the menace of non-performing assets (NPAs).

The governor hinted at the possibility of allowing banks to merge their operations in order to increase efficiency and profitability, but for all this, banks need to declare their assets as NPA he said.

Shares of State Bank of India, ICICI Bank and Bank of Baroda were down up to 3 per cent as investor concerns over earnings performance and asset quality increased. The concerns were accentuated after ICICI Bank, one of the largest private banks in the country, reported significant deterioration in asset quality and higher provisioning for bad loans in third quarter.

"Clearly what has come out is worse than what the market was prepared for. More importantly, a lot of people are aware that the next quarter is going to be bad given the kind of indications that we have had from RBI. Our sense is that the actual pain in the system is far bigger than what it is made out to be and we think about 7-8 per cent could be the gross NPL by the next quarter,"said Hemang Jani, VP, Sharekhan.

Shares of State Bank of India traded 2 per cent lower at Rs 176, ICICI Bank was down 3 per cent at Rs 223.20, BoB down 1.68 per cent at Rs 123.10 and Axis Bank fell 1.7 per cent to Rs.400.20

Read more at:
Economic Times

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